Hyundai Heavy urges workers to accept cost-cutting campaign

SEOUL -- Hyundai Heavy Industries, the world's largest shipbuilder, warned that high labor costs may drive its troubled offshore facility division to permanent closure unless workers support a voluntary retirement program or unpaid career breaks.

Last month, Hyundai Heavy proposed a drastic overhaul of its offshore business, which remains vacant with no backlog of orders. The union insists on the redeployment of 2,400 regular workers in the offshore division to ensure job security instead of voluntary retirement or unpaid career breaks.

"I honestly say that if there is no sacrifice and concession from employees, it may be impossible to maintain our offshore business," CEO Kang Hwan-goo said Friday in a message to employees. He said the offshore division has failed to win orders due to high labor costs.

Kang said Hyundai Heavy's average monthly labor cost per person is about 5.2 million won ($4,630), compared to 1.69 million won at Chinese rivals and 800,000 won at Indian shipyards.

He said the proportion of labor costs in Hyundai Heavy's offshore business is 20 percent, compared to six percent in China and three percent in Singapore. "Here are the reasons for failing to win orders," he said, warning Hyundai Heavy's overall shipbuilding business would see a further setback this year.

For years, Hyundai Heavy has been involved in sweeping restructuring to ride out a protracted business slump. In 2017, sales were down 31 percent on-year to 15.4 trillion won (14 billion US dollars).